The Professional Advisory consists of a group of seven independent professionals who provide services to the
dental profession, each of who specializes in a different eld. They have gathered to keep each other informed of
the latest developments relating to the profession, and to produce this publication which is designed to provide
expert information and advice solely for dentists and their advisors.

Smart Enough?
RALPH CRAWFORD
BA., DMD
Not long ago I was sitting in the reception area of our
local medical clinic and began browsing through the
magazines looking for something to read while I waited
for my appointment. The magazine that caught my
eye was the April 2009 edition of Good Housekeeping.
Not because being a good housekeeper was my
immediate goal but the cover bore a photo of Michael
J. Fox with the inscription “Happiness is a Decision”.
Knowing a little about Michael J. Fox and his combat
with Parkinson’s Disease (PD) I turned to the article
and was immediately captivated with the interview
he gave Good Housekeeping’s editor, Rosemary Ellis
regarding his latest best seller book, Always Looking
Up: The Adventures of an Incurable Optimist. Because
I was called into the doctor’s oﬃce before I got very far
into the story, I couldn’t resist dropping into the store
on the way home to buy the magazine. I’m glad I did.
Surely there couldn’t be very many of us who haven’t
heard of Michael J. Fox, the Edmonton born, Burnaby,
B.C. raised lad who rose to fame as a movie and TV
star and who ﬁrst showed signs of PD at the age of
30 and didn’t reveal the condition for seven long years.
And what about the Research Foundation he founded
in the year 2000 that to date had raised over $150
million to seek a cure for the aﬄiction that stalks the
life of over four million people worldwide and 100,000
in Canada.
What I found particularly fascinating about the Good
Housekeeping article were the profound insights into
Michael J. Fox’s character and approach to life despite
his Parkinson’s. Typical - and this will touch the heart
of any dentist - is the good humour approach he takes

in explaining the simple task of putting toothpaste
on a brush. But it is the phrases he uses to project his
philosophy of Always Looking Up that really caught
my attention. Take:
• Appreciate what’s good about right now and be
ready for what’s next
• Chance favours the prepared mind (a quote from
Louis Pasteur)
• I only have to be smart enough to ﬁnd people who
are smarter than me; I only have to be smart enough
to recognize who knows more than me.
It is precisely this attitude and enlightenment that
allows Michael J. Fox - despite his debilitating disease
- to do so much towards helping those similarly
burdened.
Each of the above phrases is “wisdom personiﬁed”
but the one about being “smart enough to ﬁnd people
who are smarter than me” seems to go a step further.
Because that’s what education, direction and life
is all about - seeking out the wisdom of those who
know more than we do so we can be more successful
in attaining our goals. Undoubtedly, that’s precisely
why you, a member of the dental profession, read The
Professional Advisory. Whether it’s about information
on insurance, taxes, leasing, valuation, investments, the
law, leadership and many other aspects of your dental
life, you only have to be smart enough to recognize
someone who knows more than you. In their own
modest way - and we repeat modest - that’s the role
and responsibility each of the author/contributors to
The Professional Advisory strives to fulﬁll within each
and every page.
Thank you Michael J. Fox for your tremendous
contribution in assisting those aﬄicted with Parkinson’s
Disease and for alerting all of us to be smart enough to
ﬁnd people who are smarter than me. PA

Our ability to inﬂuence the behaviour of those who
work for us is essential for our practice to ﬂourish.
However, there is a big diﬀerence between merely
aﬀecting people’s behaviour and actually inﬂuencing
it. Our eﬀectiveness depends increasingly on our
ability to handle people. Although anything we
do will somehow aﬀect the way people react and
perform, leaving decisions to others without deﬁned
parameters could easily have negative eﬀects. Reﬁning
our leadership style helps motivate and control our
team toward accomplishment of planned objectives
and implies the use of people skills.
In Volume 39, we discussed the need to hone our
leadership style for our practices to thrive in the
current recession. In the downturn of the early 90s,
a friend operating a group practice called a team
meeting and announced the following, “We are now
in a recession that is aﬀecting dental practices - we
choose not to participate.” He then proceeded to have
in-depth meetings with the team to ﬁnd ways to alter
the operation to improve eﬀectiveness and to be even
more focused on patient needs. Now that’s leadership!
Leadership styles yet to be discussed are the Abdicator
and the Enabler.
What is an Abdictator?
An Abdicator is one who indiscriminately relinquishes
responsibilities to others. This leadership style is the
opposite of a micromanager. For example, a dentist
who has engaged us for a practice enhancement proudly
declared, “I do the dentistry and I leave everything
else to Gail and Ruth, and at the end of the year, my
accountant tells me how I did.” A comment such as this
is followed up by his explanation, “Gail and Ruth have
been here for many years, and they know everything
there is to know about running this practice.” He
continued,“They are very well paid and I cannot aﬀord

to have them leave or the practice would fall apart.”
When asked about issues outside the realm of clinical
areas, his standard answer is “I don’t know, ask Gail and
Ruth.” The red ﬂags that arise are obvious. Delegating
tasks and accountability to others is fraught with
extreme danger.
Gail and Ruth are aware of their enhanced power
and the leverage with which knowledge of their
indispensability is fraught could result in unintended
abuses such as taking freedoms to organizing
protocols or ﬁxing practice hours to suit solely their
needs and preferences as opposed to the well-being of
the oﬃce. Another drawback of being an Abdicator
is that staﬀ has little or no incentive to improve their
performance because change might interfere with Dr.
X’s perception of their previous competence.

An additional negative effect of assigning away
oﬃce responsibilities is that Dr. X is not getting the
opportunity to use his expanded clinical skills acquired
by continuing professional development without the
necessary in-house promotion. By default, staﬀ is
unaware that additional systems need to be in place to
ensure that patients accept these types of treatments.
Positive changes that need to be discussed and
implemented will not occur readily in an Abdicator’s
oﬃce, thus posing potentially catastrophic results as the
current recession continues. A serious evaluation of D.
X’s participation in his own practice is needed.

The Professional Advisory

What is an Enabler?
Although in psychological language, the designation
of Enabler has a distinctly negative connotation, a
signiﬁcantly more positive perception of Enablers
is that of leaders who enable their team to grow in
eﬀectiveness, to be ﬂexible, and to feel a sense of
belonging and ownership of the process to improve the
performance of the practice. This type of leadership
allows and supports creative and proactive behaviour.
Among the characteristics of the Enabler are the
ability to enjoy dialogue and eﬀective interpersonal
communication with staﬀ and patients. Even though
they have formal structure for meetings, Enablers
encourage active participation by the team. Enablers
are aware of the role and challenges faced by team
members. They create an accepting atmosphere for
staﬀ to oﬀer creative solutions allowing patients
to receive treatment as they survive the economic
downturn. In fact, Enablers encourage suggestions
to alter the usual payment protocols by staging
treatment plans, oﬀering payment plans, focusing on
clients’ biologic needs, and staggering discretionary
treatment. Most importantly, they focus on increasing

VO L. 40 : JUNE 2009

customer service. In addition to creating accepting
environments, Enablers consider patients’ needs by
assuring work hours oﬀered are in synch with the
times available resulting from the altered workplace.
In general, heightened awareness of customer service is
a great strategy to survive and thrive in this economic
climate. Paramount to succeeding in the current
recession is understanding our past behaviour,
predicting our future behaviour, and modifying our
leadership style to one that leads to productivity and
success. The choice of leadership style, Micromanager,
Abdicator, or Enabler, is not as diﬃcult as we might
think but takes awareness and perseverance. PA

Ron Weintraub is a founding partner with the Bayview Village & Downtown Dental Associates and brings over thirty-five years of knowledge
and experience in the practice of general dentistry to the Professional
Advisory. Large companies such as Patterson Dental, Ash Temple Ltd,
Henry Schein Arcona, & the former Canadian Dental Co. have benefited
from his insight. As owner of Innovative Practice Solutions, Ron advises
dentists on practice enhancement, practice purchases, sales, location
evaluations, associate buy-ins, and business mergers. Dr. Weintraub can
be contacted at (905) 470-6222 Ext. 221 or drronips@rogers.com.

Dave’s Common Tax Traps
and How to Avoid Them
DAVID CHONG YEN
CFP, CA
www. dcy.ca

Having reviewed tens of thousands of tax returns
during my career, I wish to share some common tax
traps and ways to avoid them.
Dentists and their family members often borrow
money from their Professional Corporation (PC),
Hygiene or Technical Service Corporation (H/TSC).
This creates a tax problem to the dentist and/or his/
her family members as this money must be repaid to
the PC, HSC/TSC within one ﬁscal year after the
year in which it was borrowed. For example, if a dentist has a PC with a July 31 year end, and the dentist

borrows money on August 1st immediately after
the year end, then the borrower must repay the
PC by the end of the 2nd taxation year (i.e., two
years minus one day). In addition, interest must be
charged by the PC and paid for by the borrower at
the prescribed interest rate (2nd quarter prescribed
rate is one per cent). Also, there should be a loan
agreement evidencing this loan and interest must
be paid by the borrower no later than January 30 of
the subsequent calendar year. Some creative dentists and/or their family members try to get around
this trap by borrowing money and then repaying it back before the deadline and then borrowing money again right after. The tax department
has another set of rules to address these series of
loans and repayments and therefore this creative
maneuver will likely not work.
Alternatively, one might consider paying dividends

The Professional Advisory

to poorer family members who are 18 years of age and
older, provided they are shareholders of the company.
These dividends will be taxed in the poorer person’s
hands at a lower tax rate. The recipient of a dividend
can then gift money to whomever he or she pleases.
The recipient of the gift will not be taxed. The recipient
can then repay the PC. Another method of repaying
the PC/HSC/TSC is to transfer property into the
PC/HSC/TSC to oﬀset the amount borrowed. This
could trigger a tax bill and land transfer taxes on the
transfer of property. Another maneuver to consider
is to repay the loan by transferring one’s insurance
policy into the PC/HSC/TSC. The transfer could
oﬀset the amount borrowed depending on the value
of the insurance policy. This maneuver should not
result in any taxes on the insurance policy transfer.
Many dentists buy investments including stocks and
bonds and put them in the name of the minor children
and/or spouse. The dentist’s rational for doing this is
that if the investment is in the name of the spouse or
minor children, then any investment income, gains or
losses will be taxed in the hands of the spouse and/or
minor children. Beware; the tax department traps this
scenario. Although the investment is in the name of your
spouse/children, if the money came from the dentist’s
pocket, then the dentist will be taxed on the investment
income (except capital gains for minor children). The
way to avoid this trap is to lend your spouse money at
the prescribed interest rate which is currently one per
cent for the quarter started April 1, 2009 and ensure the
interest is paid by January 30 each year.

VO L. 40 : JUNE 2009

Although the investment is
in the name of your spouse/
children, if the money came
from the dentist’s pocket, then
the dentist will be taxed on
the investment income (except
capital gains for minor children).
Your spouse would pay you interest at the rate of one
per cent, and if your spouse is able to invest the money
at more than one per cent this will produce overall
tax savings. The resulting investment income will be
taxed in your spouse’s hands; while the one per cent
interest income from your spouse will be taxed in the
dentist’s hands. These loans should be evidenced by a
loan agreement.
By knowing the various tax traps, one can better
navigate around them with some peace of mind. PA
David Chong Yen, CFP, CA, of DCY Professional Corporation Chartered
Accountants, has completed the CICA In-Depth Tax Courses and has been
advising dentists for decades. Additional information can be obtained by
phone (416) 510-8888, fax (416) 510-2699, or e-mail david@dcy.ca.
www.dcy.ca. This article is intended to present tax saving and planning
ideas and is not intended to replace professional advice.

Taking Care of Business
GRAHAM TUCK
H.B.A., C.A.
www. ppsales.com

I am fortunate to have David Lind here to service our
clients while Val and I went for a cruise in the Orient.
Beijing for three days then the cruise; Tianjin to
Shanghai, Okinawa, Taiwan, Hong Kong, two ports
in Vietnam, Singapore then Bangkok for three days.
We stopped in Vancouver both directions and visited
some friends. A great vacation! But when we arrived

home we had ﬁve inches of water in the basement.
Both sump pumps failed.
I thought back a few years when our agent suggested
that we should put sump pump insurance on the house
insurance. I am very glad that we did as two thirds of
the basement is ﬁnished space and the replacement of
the furnace, the freezer and the reconstruction of the
walls is all covered by insurance.
This in turn reminds me that we tell our clients they
should have a valuation and update it on a regular basis
because you never know what is around the corner in
life. If the ﬂood comes in whatever form, it is nice to
know that the valuation is complete and current. You
have taken care of business and have the

The Professional Advisory

VO L. 40 : JUNE 2009

assurance that you have done everything reasonable
to protect your asset, the practice. Too often spouses
are left to pick up the pieces and it is a lot harder if
they have not been involved in the business.

ten years out.
When dentists are about 45 to 50 years old they come
to the realization that they will not live forever. We do
very few valuations for retirement planning for dentists
under 40. We do valuations for partnership break ups,
matrimonial purposes, and for sale when the dentist is
going back to school or moving to the U.S.A. (in fact
we just completed one of these this month).
Most valuations that we do are not for immediate
sale purposes. We think it is wise to have a valuation
done eight to ten years before you wish to sell your
practice. This provides planning time with regards
to equipment replacement, lease renewal, staff
requirements, and relocation options. Think of us as
another set of eyes.
With regard to estate planning, you will need a current
valuation to sell your practice. The purchaser’s bank
The valuation can be used for retirement planning. will require a current valuation. Think of an update of
Often the practice and your home are your two an existing valuation costing about $500 per owner per
main assets. But more than this, the presentation of year. As with my ﬂood, this is a small price relative to
the valuation should draw your attention to areas of the beneﬁts of keeping a current valuation in hand.
potential improvement that can be carried out over
future years to improve the value of the practice.
Graham Tuck, H.B.A., C.A. is the broker/owner of Professional Practice
There is time to consider even such basic concepts as Sales (Ontario) Ltd., which specializes in the valuation and sales of dental
moving to a new location. See my article in Volume # practices. He can be reached at (905) 472-6000 or 1-888-777-8825
32 How Do I Prepare My Practice For Sale? eight to or e-mail at: grtuck@rogers.com

Smile Dental: Practice
Names Revisited
DAVID ROSENTHAL
BA., LL.B.
Originally dentists were required to practice dentistry
using only their personal names as registered with
the Royal College of Dental Surgeons of Ontario
(College). However, changes to the regulations under
the Dentistry Act, 1991 permitted dentists to carry
on dentistry using a practice name other than their
personal names. The College issued a Practice Name

Advisory in May of 2000 to provide certain guidelines
as to what is and what is not acceptable for practice
names.
Before using a practice name, that name must be
registered at the Ontario Ministry of Consumer and
Business Services. The name must also be registered
at the College, and depending on the practice name,
possibly be approved by the College’s Executive
Committee before its use is permitted.
If the practice name is “reasonably referable to and
describes the location of the practice”, the regulations
state that the approval of the Executive Committee is
not required since such a practice name makes it easier

The Professional Advisory

for the public to identify a particular oﬃce. Names
such as King Street Dental Centre or Main Street
Dental would be acceptable under this category. Often
a dental practice is located in a shopping mall or plaza,
so if the practice was located on King Street at the
King Plaza, a name such as King Plaza Dental Centre
would also be acceptable.
However, any other name that does not refer to the
location of the practice does require the Executive
Committee’s approval. The College will not approve
a name that refers to any area of dental treatment
other than the recognized specialties and also will
not approve a name containing an adjective if that
adjective (1) may be potentially misleading, (2) is not
veriﬁable by the facts, (3) makes comparisons to other
practices suggesting uniqueness or superiority, and/or
(4) is likely to create expectations of favourable results
or appeals to the public’s fears.
The Practice Name Advisory Names Advisory lists
some of the adjectives which have not been approved,
such as “best”, “convenient” and “painless”. Other adjectives not listed but which I understand will not be
approved include “pure” or “white”.
Historically the word “Smile” was not approved or
permitted in a practice name. However I understand
the College changed its policy and will permit Smile
Dental as part of a practice name. The word Dental
must be included, likely so there is no confusion with a
hygiene clinic. Adjectives are not permitted. Therefore

VO L. 40 : JUNE 2009

practice names such as Big Bright Smile Dental or
Best Smile Dental are not acceptable.
Imagine if dozens of separate dentists received approval
for the practice name Smile Dental for their dental
practices. Clearly this would create confusion and be
misleading to the public who might believe all of these
independent practices are one chain of dental practices.
Therefore the College will not simply approve Smile
Dental. Further words are necessary in a practice name.
The purpose of a practice name is to identify your
own dental practice. If you wish to use Smile Dental
as part of your practice name (and have that name
approved by the College) I suggest adding the location
also to the name. Names such as King Street Smile
Dental, Smile Dental on King, or King Plaza Smile
Dental would be practice names likely to be approved
by the College.
The above names are examples for illustration purposes only. I choose King Street in these examples as
my law ﬁrm is located on King Street. Perhaps it’s time
to change the name of my law ﬁrm to Smile Legal on
King…well, maybe not…it does not seem to have the
same ring to it as Smile Dental. PA
David Rosenthal is a senior lawyer with Spiegel Rosenthal Professional
Corporation whose practice is devoted to corporate, commercial and
business law, with special emphasis on advising and consulting for the
dental profession. He can be reached at (416) 865-0736; or fax to
(416) 203-8592; or e-mail to david@drlaw.ca.

I meet many dentists who envy the Ontario Teacher’s
Pension Plan (OTPP) over their own retirement
plan. And what’s not to envy!?!
A teacher receives a basic annual pension of two per
cent multiplied by their years of service times the bestﬁve years’ average salary. So if you spent as long in
teaching as you did in dentistry, you might be eligible
for a pension of over $120,000 per year (pre-tax).
One advantage of the OTPP is that it is a deﬁned
beneﬁt plan, so a teacher’s pension is guaranteed
despite investment performance.
As a dentist, you do not have an institutionally
managed retirement plan. Therefore, you are
responsible for all your retirement and investment
decisions. While it is not true in every case, the
decisions we have seen dentists and their advisors
make have not generally resulted in the same (or even
similar) success that teachers have enjoyed.
If measurement is based on investment performance
and funding retirement needs, in general it is my
experience that teachers are far better investors than
dentists. So what is holding dentists back? Well, a
few salient points include:
1. Their management fees are too high.
2. Retirement plans are one dimensional. They do
not include tax planning and cash ﬂow planning.
3. No attention is paid to Sequence of Return
Risk, which is basically the risk that even short-term
negative portfolio returns, especially in the early
years of retirement, can leave a portfolio unable to
fund retirement income needs.
4. Too much of the portfolio is allocated to equities.
I have seen many a dentist relying on very unrealistic
equity returns to fund their retirement. Your
concentration should be placed on minimizing risk

and making money in the practice!
5. Investment advice is provided in a vacuum. In
other words, the dentists’ advisors are targeting an
arbitrary investment return. We believe the place
to start is by determining how you will get your
retirement income at age 90 and working back from
there. Investment decisions then fall into place.
Investment advisors often have a circle of competence
and their clients are best served if the advisor stays
within it. For example, if you had a patient with a
malocclusion you might decide that an orthodontist
is best suited to treat the patient and refer the patient
along. Unfortunately, this doesn’t often happen in the
investment advisor community. I have never had a
dentist walk through my doors and say that since they
are now thinking about retirement and their ﬁnancial
needs are changing and growing much more complex,
their advisor has referred them to another ﬁnancial
consultant who specializes in retirement planning.

Once you have already retired it is too late
to implement many of the tax and cash flow
management strategies, which need to be set up well
in advance to be employed to help ensure you have a
ﬁnancially sound retirement.
The emotional attachments that hold many dentists
back from ensuring they are receiving the best possible
retirement planning advice are some of the very
reasons why the teachers’ pension plan is so successful.

The Professional Advisory

For teachers, these emotional attachments do not
factor into the equation. OTPP has a team of
top pension fund managers who all specialize in
funding the retirement of teachers. The teachers who
currently have their retirements placed squarely in the
hands of the OTPP have no emotional connection to
these professionals whatsoever. The teachers’ personal
feelings are factored out. As a result - even though the
OTPP is not without their troubles - as of December
31, 2007 the Ontario Teacher’s Pension Plan has
recorded an average annual return of 11.4 per cent
since 1990 and funded all their retirees’ pension
obligations along the way.
Now with the above in mind, the fact remains that if
planned properly and well in advance, most dentists
have an opportunity to develop their own retirement
“pension” that is far in excess of what any teacher
receives. For example, our average client receives
$10,000 a month from their portfolio to fund their
retirement, and that amount is after-tax, indexed for
inflation, and has not been affected by the recent

VO L. 40 : JUNE 2009

downturn in equities. In contrast, the current average
annual pension for an OTPP member is about
$41,000 a year, before tax.
Most institutionally managed pension funds follow a
Liability Driven Investment Model. Liability-driven
investing (LDI) focuses on setting enough assets
aside in advance to fund liabilities as they come due
in the future. It also recognizes that when it comes to
retirement planning, the true measure of investment
success is the ability of your assets to meet your planned
future cash payments, with as little risk as possible.
It has been my experience that dentists who follow
this model are the better investors. PA

Mr. Mark McNulty BA, CFP, CIM, is a financial advisor with Raymond
James Ltd., Independent Financial Services - Member CIPF. This article is
for information only. Its opinions are those of the author, not necessarily
those of Raymond James Ltd. He may be contacted at 905-470-6222
ext 209 or mark.mcnulty@raymondjames.ca.

The Black Swan
and Insurance
DR. IAN WEXLER
www.protect-ins.com

Recently, I ﬁnished what I consider to be, one of, if
not the most inﬂuential book I have ever read. It is
called The Black Swan and it is written by a brilliant
individual by the name of Nassim Taleb, who
holds a Wharton Business School MBA, a PhD. in
Management Sciences, was a Wall Street trader, is a
philosopher, university professor, bestselling author,
speaks four languages, and is completely unafraid to
say “I don’t know” about something.
To summarize The Black Swan is extremely diﬃcult,
other than to say it is about the unpredictability of life
and how major unexpected, unpredictable, and random

events help explain and shape our lives and the world
around us. The reason for the title has to do with fact
that for a great number of years, people only thought
that white swans existed…until someone sighted
the ﬁrst black swan, and that changed forever how
people view swans. A Black Swan according to Taleb
is an “outlying event that lies outside of the realm of
regular expectations, carries an extreme impact, and
retrospective predictability.” Taleb explains that these
shocks to our lives can be positive or negative. Everyone
reading this article or The Black Swan will certainly be able
to go back into their own lives to see what major events
or Black Swans have shaped them. Taleb asks “How often
did these things occur according to plan?”
Consider just some of the Black Swans in your life
including some recent and not so recent world events.
You can start with our current ﬁnancial crisis, the
9/11 terrorist attack, the invention of computers and
the internet, how you met your spouse, or

The Professional Advisory

even how you became a dentist.
Because of my own life, starting oﬀ as a “single, dentist
in New Jersey, to where I am today…a married insurance advisor with three kids living in Toronto” I found
the premise of The Black Swan to be of great signiﬁcance. Particularly though, I realized after reading the
book that I deal with Black Swans everyday:
1. Convincing individuals that “negative“ Black Swans
exist in the form of incurring a severe disability or
dying;
2. Helping individuals understand the financial
impact of these types of Black Swans on their practices and families;
3. Providing ﬁnancial protection to individuals who
would beneﬁt from it in the event of negative Black
Swan;
4. Helping those at “claim time” who have just experienced a negative Black Swan.
What I have found out in my years as an insurance advisor is that many individuals, dentist clients
included, like to think they know what the future
holds. I routinely hear:
• I have great genes! My parents are completely healthy,
and my great grandparents are 100 years old. I’m
quite conﬁdent nothing will ever happen to me;
• I don’t play any hazardous or dangerous sports, and
lead a simple lifestyle;
• I’m young and in great shape, plus I exercise regularly;
• It just won’t happen to me!

VO L. 40 : JUNE 2 009

This was not supposed to happen to me!“ or, “I need
to put in claim…what do I do…where do I start…do
I have enough coverage?”
People enjoy a level of comfort and satisfaction in
thinking they know or can control to some degree
what the future holds. We are raised and educated this
way. This includes everyone from professional sports
team owners to “all” of the economists who think they
can predict how and when the ﬁnancial crisis is going
to end. Not one economist or politician by the way,
predicted the current crisis!

A Black Swan according to Taleb
is an “outlying event that lies
outside of the realm of regular
expectations, carries an extreme
impact, and retrospective
predictability.” Taleb explains
that these shocks to our lives can
be positive or negative.

I have always known, even before reading The Black
Swan that insurance protection can be viewed from
a few directions with regards to mathematical
probability. The first is that I could recommend
It is not uncommon for these same individuals to tell insurance coverage based upon statistical probability
me when and how they are going to die or incur a dis- (which is how all insurance plans are essentially
ability. The logic behind Black Swan events hold the priced). In other words, I could throw my clients onto a
“bell curve.” The second is that I can protect them from
opposite and include:
being blindsided from an unforeseen, random event
• You cannot predict the future;
• You cannot choose which disability you might get, that could have devastating ﬁnancial consequences.
when it will happen, how severe it will be, or how It is up to you to decide how best to protect yourself
in the event of a Black Swan! PA
long it will last;
• You cannot predict when or how you will die (unless
you commit suicide of course).
Just the other day, I received a phone call from a client
commencing the twentieth disability claim that my
insurance ﬁrm is currently overseeing and managing
- a new record. The phone calls I get are always from
either the oﬃce manager or spouse (usually the worst
case scenario) or the client. In this case, it was the
client who called. He began by stating what seems to
be the opening line for all claimants, “I can’t believe it!,

Dr. Ian Wexler is Canada’s leading authority on insurance issues for
dentists. He is the President of Protect Insurance Agencies Inc. in Toronto
which provides specialized expertise in life, disability, critical illness,
long term care, annuities, and other insurance products and services to
professionals, executives, and business owners across Ontario. He can be
reached for questions or other enquiries at (416) 391-3764 or drwex@
protect-ins.com

Consider the following:
• In many areas new housing and retail developments
have been put on indeﬁnite hold and some of these
properties have been listed for sale. Major residential
and retail developers are in ﬁnancial distress.
• Shares in publicly traded landlords (for example,
Riocan, Morguard and First Capital) have decreased
signiﬁcantly in value, in some cases the decrease is
more than 60 per cent.
• Retail leasing managers with many years of experience
are being let go and not replaced.
• Landlords are actively promoting properties for lease,
whereas up until last summer they would not take or
return calls.
• With speciﬁc respect to space for lease, the Toronto
Real Estate Board reports that whereas the number
of square feet leased increased by 21 per cent in July
of 2008 compared to July of 2007, that increase fell
to a mere 2.9 per cent in August of 2008, and has
continued to slide since so that the number of square
feet leased in January of 2009 dropped by 60.1 per
cent compared to the same month in the previous year.
The net change in space leased during July 2008 and
January 2009 is a staggering 81.1 per cent. The trend
continues; space leased in February 2009 was down
by 44 per cent from February 2008, and in March of
2009 it was down by 54.8 per cent.
Tenant’s sales and conﬁdence is down signiﬁcantly
and as a result they are not renewing their lease terms
or building new locations. Tenants are failing and
leaving their units vacant. And new space continues
to be added to the market.
What does this all mean? There is a very signiﬁcant
change occurring in the realty leasing market. The

signiﬁcant decrease in demand for leased space results
in an increase in space remaining available for lease.
As the supply of leasable space increases, the demand
decreases, signiﬁcantly improving tenants negotiating
ability.
Right now, and for the foreseeable future, base rental
rates will hold at or close to current levels without the
dramatic increases seen during each of the past several
years. Additional rents will continue to increase as
pressure to increase proﬁtability motivates landlords.
If the lack of demand continues for more time than
their cash reserves allow, landlords will need to sell or
reﬁnance and rental rates will drop.
At this point the real opportunity is to understand
that as a tenant, you have both an increased leverage
opportunity and a greater range of opportunities to
use that leverage. My advice is to prepare to advance
your position as a tenant over the next few years.
1. For existing tenancies between renewals - inventory
your lease position by having your lease reviewed and
key opportunities identiﬁed. Now is the time to be
ready to accomplish those subtle lease changes which
will have big payoﬀs in future years such as capped
additional rent, additional tenant favourable options
to renew, and relaxed assignment provisions. Consider
approaching your landlord with an unsolicited
proposal to amend the lease.
2. Lease term renewals - it’s more important than
ever to take control and approach your landlord well
in advance of the term expiry date to make sure they
realize that you still have time to move, because in this
market not only will the alternate space be available,
but the competing landlord will provide incentives
to make that move economically attractive. Use this
leverage opportunity to make sure you receive the best
possible rental rate and adjust other tenancy terms
and conditions with your current landlord.
3. For new tenancies - think outside of the box, literally
and ﬁguratively. Instead of the “what you see is what
you get” conditions that we have seen for a number of
years, now is the time to adjust your thinking to reﬂect
“what you can see is what you get”.

The Professional Advisory

VO L. 40 : JUNE 200 9

PA

Developers will now build premises “to suit” because current leverage climate to make sure that all of the
there is little demand for their standard “four walls terms and conditions aﬀecting your tenancy are as
and a ceiling” space. Custom built space includes favourable as possible.
many extremely important features such as choice
of position within the plaza, choice of size of unit,
signiﬁcant landlords work, long terms at comfortable
lease rates and ﬁnancial packages suited to tenants’ Based on more than 20 years business experience Mr.Toms, B.Sc. (Hons)
tax planning needs. Know what you want, and be acts as a tenant advocate on behalf of select retail and professional
tenant clients primarily in the Greater Toronto Area. Mr. Toms is
prepared to ask for it.
licensed as a Real Estate Broker and can be reached at (705) 743In summary, now more than ever it’s important to 1220, by e-mail at iantoms@pipcom.com, or through his web site at:
understand the details of your lease, and use this www.iantoms.com

The views expressed in any article are those of the author alone. They should not be acted upon without the advice of your “professional advisors”.